Day trading setup - Stock Screener result based on Inside Day & Narrow Range Seven (NR7) Strategy

This is probably the first time I am uploading the list of stocks that made the Narrow Range Seven (NR7) day setup along with "inside day" pattern. Check out the list below.

Above stocks traded in the smallest range today compared to past 7 days including today. I have taken the futures data from NSE, so please verify the above results with intra day charts. The list is arranged in descending order of turnover of a contract. These stocks might be good for day trading tomorrow, as today's price action will appear as a contracting triangle on short term charts, especially the stock that made inside day pattern. As these stocks are exhibiting range contraction, one can expect the range to expand in the short term, that is the basic assumption of this setup.

You can track your own list of stocks using the screener that I have uploaded before, visit the link below for a detailed post on how to update the screener file.
Download - Stock Screener based on Narrow Range Seven (NR7) Strategy

What is the average profit per trade of an intraday Nifty trader?

I think I am asking again :)

Any idea what is the average profit per trade of an intraday trader?

For example if an intraday trader takes 3 trades, makes a profit of 20 points on all the three trades, his average profit per trade would be (20+20+20)/3 = 20 points per trade.

If another one, takes 3 trades like win 20 & 20 on first two and lose 10 points on the 3rd trade. His average profit per trade would be (20+20-10)/3 = 10 points per trade.

Another example of a trader, win 20, lose 10 and 10 His average profit per trade will be (20-10-10)/3 = 0 points per trade.

I would request traders and readers to please tell what is the average profit per trade of an intraday Nifty trader? This will help in setting the right expectation for our intraday trades, and one can plan the trades, the right way.

As per today's levels a trader would have made approximately 80 points from peak to trough (5740-5660) and approximately easy 50 points (5740-5690) if the position was squared off close to end of the day

So do you feel 50 point per day per trade is fine for intraday, at times we may not get the profit the same day but that's never the intention, as these are swing trading levels. If we get more than 50 points, we should be out of the trade end of the day (EOD)?What is your opinion?

Cheers.

Whipsaws - A mood spoiler in trading

Hi,
I was discussing about whipsaws with my friend and blaming automated trading for it.I feel that's not the right way to approach it.Check out the following three points and review your trades

1) Just check the kind of stocks or index you are trading ...are you trading Nifty?...or trying to find a trend in sideways trending stocks like NTPC, ITC, HUL..etc If yes then consider switching over to real estate and bank nifty for better trades or use a trading system meant for sideways market using oscillators.

2) Another issue could be a late entry..like entering around the end 3rd wave or during 4th wave as per Elliott wave principle.Now if you are not familiar  with Elliot Wave, no problem..find out a way to screen a stock and enter after a sideways consolidation is significantly over...trend channels / Bollinger bands can also be used.

3) Another problem (most likely one) could be that you are placing your stop loss too close to CMP ( Current Market Price )...or trailing your stop loss too aggressively..If you are carrying positions for a couple of days consider placing a trailing stop at least 1 ATR away from recent highs...( is that too much for you?..then probably you should not be a swing or positional trader ...move to day trading )

Whipsaws in trading are part our business, they should not influence your day to day trading.Too much of thought about failed breakouts/whipsaws can result in loss in confidence and delay in decision making thus affecting profitability

Hope this helps
Cheers

Related Post
How do I calculate SAR

Neglected Essential : Simple Money Management Rules For Online Stock Trading

I have been posting Stop And Reverse (SAR) levels for some time now, its performance has been satisfactory. Recently I reviewed the performance with bank nifty as example. Since we had budget presented in this review period, the returns were impressive. Now as we have entered sideways market conditions for the past few days, we are getting whipsaws in trading, resulting in losses. One such loss was experienced today in trading nifty. So how to deal with such situations and minimize the loss?


The answer to the above question and for overall "good trading discipline" lies in sound money management practices. Money management is perhaps the most neglected idea in trading, psychology is another aspect often ignored by traders. Some people have written very complicated books on money management and related aspects using all sorts of mathematical ratios. But I am going to present it in a simple way (that's what this blog is all about,"the made easy" stuff right?). It will ensure that you keep your trading volumes in check, thus giving you enough liquidity and peace of mind in tense situations.

So here is what you need to do:

1) First find out how much is your trading capital? Let me take 1,00,000 (one lakh) as trading capital in this example.

2) Divide this amount by 2, that comes to 50,000

3) Keep 2 lots (of 50,000 each ) one for UP trending stock/index and other for DOWN trending stock/index

4) Now divide 50,000 into two, that comes to 25,000 worth two lots.

5) One of these lots (worth 25,000) is for breakout trade (breach of SAR in intraday trading) and other is for a pull back trade (when the price comes close to "low risk entry" in intraday trading )

That's all about it, money management in trading can't be simpler than this. Now let me list some advantages and disadvantages of this plan.

Advantages :

1)The Plan keeps you in both bullish and bearish trending stocks...so you are automatically hedged.

2)You are diversified, as you will have positions in two different stocks/index

3)You enter into two positions, one at breakout and other at first pullback therefore a lot of confusion in the mind is resolved.

4)You average down your  winning trade and not your losing trade (as long as SAR is not breached you assume that you are in a winning trade). Check this how I suffered badly by averaging my losing trade. You should never average a loss making trade.

Disadvantages :

1) Psychologically it's a bit tough. Why? because you have to be long in one trade and short in another, many new traders are not comfortable with the idea of shorting.

2) What will you do if all stocks are going up and you cannot find a single stock to short and vice versa? In that case you let the other half (50,000 for short) lay idle in cash and wait for one of the short trade to appear (you will surely find it in couple of days)

3) Too much capital is required to follow this plan, it may not be not easy for new trader initially. In that case you should follow half the strategy, that is, enter your trade in two tranches one at breakout other at pullback

Above are some pros and cons of this plan. Clearly I can feel that advantages are more in this plan than disadvantages.

That's all about the plan for the time being. I feel it's quite good. I will make necessary changes as per your feedback and suggestions. Please share your experiences with money management practices and also try to highlight some more advantages and disadvantages of this simple plan.

I hope it will help a lot of traders. It is certainly going to help me :)

Related Posts:

How to use market calls table
Should you take all the SAR trades?

Triple Screen Trading System - Dr. Alexander Elder trading system

Sriganeshh said....
anuj
just thinking..u created so many excel programs.
what's ur view on elder's trading system..is it not good?
like to know ur views
best
sri
*****************************
My notes:
Dr. Alexander Elder trading system - http://www.elder.com/
Do you mean the triple screen trading system?
I think it is one of the best and logical way to trade.I feel it is similar to other systems or setups.like multiple time frames theory and what Ilango mentioned today in this blog 5th of  5th in Elliott wave...
What is 5th of 5th in Elliott wave? If you take a closer look you will see that, there is a 5th wave in progress and there are a smaller degree of  a waves within that fith wave ,which is making 12345 wave pattern.
So the best place is to sell or buy is when markets are overbought or oversold in two time frames.I do this quite often.I check 15 min time frame and establish a bias (markets call table)and use Intraday (5 or 1 mins chart) to enter in direction of trend.

How do I do that?
Information that I have before the market opens (I know the direction of trend and I also know when it changes(SAR - Stop And Reverse )
Assuming we are in down trend(opposite in case of up trend).I try to establish a point where market will be overbought in 15 mins chart.Then I move to 5 minutes or 1 minutes to find overbought levels in that  time frame.
This point is the place which gives me best risk to reward in terms of 15 minutes chart and my  SAR (Stop And Reverse).So I enter shorts at that point
In simple words, look for a pullback (against the trend movement) in your trading time frame to get a good entry (better risk to reward ratio)

I hope it gives some new insights,for more read Dr Elder's book,Come into my trading room.I will discuss this in details with chart some other time
Good luck
Cheers

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How do I calculate SAR

How do I calculate SAR ?

Hi,
A lot of people have asked in the daily "Trader's talk" post about how do I calculate the SAR.
But before I put down some details about it ,I would like to mention that this method may not be suitable for your trading style for example an intraday trader may find "SAR" too far and the calls will be of no use to her/him.While a Positional trader will find it too close to his entry point and fear a whipsaw( even if he has a time horizon of as less as 5-6 days).
This method has evolved keeping in mind the swing trading mindset (we try to enter during intraday pullbacks in the direction of trend and hold on to the position till the SAR gets triggered,we keep adding to our position every day on intraday pull back  and use the gap (up/down in our favor) to add or reduce position.


What is SAR?
SAR (stop and reverse) is a point/level at which it is believed that the trend which is currently in place changes to the opposite one.For swing trade SAR can be any level that is beyond the expected intraday noise(movement),yet it should not be too far from the recent price action(that will result in bad exits and you will end up giving back your accumulated profits)
there are no hard and fast rule for SAR and method changes as per market conditions (stock/index in trend or sideways movement)


Following are some ways how I calculate SAR
1) Recent price action (one,two, three day high/low )
2)Moving average (200 dma)
3)RSI recent peak and price at that point
4)ATR (average true range)


The system does not uses any trend line, pivots,and the use of indicators is minimal.All the importance is given to prices.I give more importance to selecting stock and trading them with this method.You should not stick to your favorite stock/index and be willing to change as per market conditions.


I think thats all about it,if you have questions related to above feel free to ask,but make your own rules and do your own research.that will help you in your long term success in the markets
Good luck


Related Post
How to use the market calls table 
Should you take all the SAR trades?
Opinion and Answers about SAR and Trading.
Two scenarios that can lead to a better performance of SAR trades.

Let's have some fun on a day which is not so funny!!!

Hi,
Today is 22 January 2010 things are quite calm in the markets though we came down a bit yesterday,but things we not so calm 2 years back.I am referring to 22 January 2008 the day the market fell and fell so sharply that trading was halted because of a down circuit
I am posting this link


http://www.moneycontrol.com/cnbc/videos/livevideo.php?prg=bazzar&dt=2008-01-22



which i want every body to see it today or over the weekend and review your trading decisions that you made pre/post/during that event.This weekend sit down and analyze how you have grown as a trader and what mistakes you made during that time, if you were trading and try not to repeat them in future.


If you were not a trader at that time then this becomes all the more important for you.It will make you prepare for the worst case scenario.One of the basis on which technical analysis is based is that history repeats itself,so do this exercise this weekend its worth the effort that will be required,you just have to watch the show(easier than analyzing the chart over the weekend)


Once you have watched the show.Please participate in the poll that I have added on the right hand side of the blog.I have casted my vote.I found the video to be "funny" and also "i hate business news channel (laughing at my self on how unaware I was....but I was not alone the "experts" were with me....dont forget to look at Satyam results which were flashing ) At that time I was extremely frustrated  and a worried man.Watching the video from time to time still sends shivers down my spine.


Some of the wall street wizards believe (and is true as well) that market is all about psychology.
You will see how Udyan/Sudarshan etc are reacting to the panic situation and how the so called experts can go terribly wrong in there analysis.I will watch it as well tomorrow again.Udayan says he will sell his house and buy stock that day(if i remember correctly),I hope he didn't do that,because I made a similar mistake and suffered.What happened after that we all know the market fell another 50 percent from that level some stocks 70- 80 percent.(check Suzlon and Unitech...large cap index stocks)


That makes me mention that you should never try to catch the falling knives.Always know where your stops are and how much volumes you should trade with.Don't ever lose your sleep over trading(on second thoughts its past 1:30 and I am still online....:))....) 


Time to sleep.Good night ,Happy and safe trading for everyone

Markets goes down,did you made the most of it ???

Market today went down quite sharply.But the international market were not showing the same momentum on the down side as the Indian markets .
Were you able to use this trending day in you favor? If you check the market calls table for the past few days that i have posted you can see that if you followed it with a plan you would be in good profit by now and possibly more to come in coming days
The most important thing that really matters is how disciplined you are in you approach and how meticulously you plan your trades(plan your trades and trade your plan)
Discipline and money management are most essential things to take care while trading.
So stop that search for the best indicator/leading indicator/price projection etc and concentrate on Stops and their management.If we survive we will get plenty of opportunity to trade  and be profitable don't lose that capital in your trading account

It pays to follow the index (Nifty)

hi,
In the morning the expectation of a gap down were high because of the Asian cues.But the gap in nifty was not too big  more over it stayed above the SAR mentioned in the Market Calls table.Then there was a sudden movement and it took Nifty quite close to recent week highs.

In the market calls table some stocks were mentioned for a short trade while the market(nifty) was still showing bullishness with up swing intact.Its always better to trade in the direction of market so taking bullish trades would have been profitable.Although stock do there own thing because of news,technical factors and sector sentiment,but it pays to be trading in the direction of market trend

Same will be applicable for tomorrow's trades, reliance,dlf, tatasteel, are coming  up as short trends but its best to avoid them as general market is bullish.In fact dlf is about to complete a reversal(it ended the day at the high point thus chances of a gap up tomorrow is very high) and reliance is completely sideways since ages.

More later